ING to Pay $5.8 Million in 401(k) Trade Disclosure Accord

By Margaret Collins -
Feb 4, 2013

An ING Groep NV (INGA) unit that administers
401(k) retirement plans agreed to pay $5.8 million to settle
allegations it didn’t tell clients that it would pocket market
gains on trades that were delayed.

ING Life Insurance & Annuity Co., a Windsor, Connecticut-
based unit of the largest Dutch financial-services company, will
pay $5.25 million to about 1,400 retirement savings plans and a
penalty of $524,509 to the U.S. government, according to a
settlement disclosed today by the Department of Labor.

“All of us who are planning for retirement deserve to know
how our savings and investments are being handled, how much is
being charged in fees, and how much these transactions impact
final account balances,” Acting Secretary Seth D. Harris of the
Labor Department said in a statement.

The accord represents the amount ING will pay plans for net
gains it retained when there were errors or delays in processing
a trade or redemption from a 401(k) account. If the transaction
resulted in a loss from the time of the request, ING restored
funds to the account, the Labor Department said.

“Our longstanding policy has been to put customers in the
position they would have been in had a processing error never
occurred,” Joe Loparco, a spokesman for Amsterdam-based ING,
said in an e-mail. “We are very pleased to have resolved this
matter with the Department of Labor in a way that benefits our
client plans and participants, and various stakeholders.”

Cost Transparency

ING must now disclose in contracts with 401(k) clients its
practice of keeping gains on transactions that are incorrect or
delayed, according to the settlement. Current plan clients will
have 30 days to object to the policy. The company also will
report at least once a year the amount of any gains it retained.
The Labor Department said it began investigating ING’s practice
in 2007 and the settlement involves transactions from 2008
through 2011.

The agency has been focusing on cost transparency in
employer-sponsored retirement plans such as 401(k)s. It enacted
rules last year requiring detailed disclosure of 401(k) expenses
to workers and employers including those for investment
management, custody and administration.

The department hasn’t been able to adopt a proposed rule
that would have made more 401(k)-plan advisers abide by a so-
called fiduciary standard, or put their clients’ best interests
first, after objections to its scope by some financial-services
companies. The agency withdrew its original proposal in
September 2011, having considered comments on it, and has said
it will re-propose the regulation this year.

Americans held about $3.5 trillion in 401(k) accounts as of
Sept. 30, according to the Investment Company Institute, a
Washington-based trade group representing mutual-fund firms.